Appraisal News and Business Tips

1-30-20 Newz: Tax Records SqFt. – Weird SFR Zoning – 5 ft. Wide Home

13516718 – white wood texture with natural patterns

Tax Records is not the definitive source for square footage!

By Ryan Lundquist

Excerpt:

Why is the appraiser saying it’s only 1,400 sq ft? Tax Records shows the home is 600 sq ft larger. This issue comes up ALL the time, so let’s talk about it.

The truth: The Assessor’s records are generally reliable, but I’m just saying sometimes they’re not. Why is this? At times it’s as simple as the original builder not turning in accurate information when a house was built. Or maybe an owner took out permits but official records were never updated. Of course we’ve all seen instances where the tax roll shows two units on one lot, but there’s really just one house nowadays. Let’s not forget sometimes owners do an addition without permits, so the Assessor might actually be correct even though the house is technically larger or has even sold on MLS as a larger home. For reference, here are ten reasons why an appraiser’s sketch might be different.

For lots of comments and more info, click here

My comment: This one of the main reasons that AVMs will never be very successful for all homes. Over and over again, statistical analysis shows GLA is the most important physical feature overall.

Also, how bedrooms are determined varies a lot, depending on the local market and can vary over time. The assessor number of bedrooms may not match the appraiser’s. For example, tandem rooms. Finished basements can vary also.

I started appraising at a CA assessor’s office in 1976. In CA, State Board of Equalization regulated county assessors offices, so the procedures and terminology are very similar all over the state. However, GLA from the assessor may have different requirements than other sources, such as ANSI.

Proposition 13 passed in 1979, which only allowed an annual 2% increase in assessment per year, unless there was a sale or improvements (determined by permits). Over time, the information has become more and more out of date.

Data is not available for smaller counties if the assessor says it is confidential. Until the 90s, my county did not release any data, so I had to “guesstimate” on square footage for sales and listings. We finally got it when an MAI was elected assessor.

In the early 90s, I researched assessors records around the country. In some small rural counties the records were kept at the assessor’s home. They were not digitized and available for purchase by data companies.

Appraisers need to know which areas are not accurate. Someties GLA is “political”. Within a city, accuracy can vary. In my city the least accurate records are in the “Gold Coast” with many of the city’s larger, historic homes. In other nearby cities, some properties have low GLAs to keep the property taxes lower.

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America Is Overrun With Bathrooms

In the past half century, the number of bathrooms per American has doubled.

Excerpt: American exceptionalism takes on many forms, both flattering (our immigrant-founded start-ups) and unfortunate (our health-care prices). But perhaps no part of life in the United States is more unambiguously exceptional than this: We have so many damn bathrooms.

And the world wants to know why. The internet is filled with long threads, on sites such as Quora and Reddit, in which users swap theories on “What’s the American obsession with bathrooms all about?” and “Why do houses in the US have so many bathrooms?” “There are so many incredible America decadences that are mind boggling to foreigners when we first arrive here, and the sheer number of bathrooms in suburban houses is very high on the list,” Tom Gara, an Australian who edits opinion pieces for BuzzFeed News, wrote on Twitter.

Interesting and worth reading with history back to the Roman’s public baths. To read more, click here

My comment: I have never heard anyone complain their house has too many bathrooms (or too many garages) ;> Fortunately, most agree on what is a bathroom or half bath so public records are not as far off as square footage!!

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5 ft. wide house: La Casa Estrecha (The Narrow House) 

Excerpt: Ensconced between two regular-sized buildings, “The Narrow House” draws visitors to tour its surprising dimensions. Its facade features a vibrant yellow hue and a lush green door, making it very hard to miss! Álvarez bought the house when it was a “complete ruin” and according to this video, the design is all his own.

Despite its slim stature, the house has all the basic amenities of a home, including a living room, dining room, kitchen, bathroom, and bedroom. The bathroom’s design, however, is a bit tricky: without enough space for a separate shower area, the floor was fitted with a drain under the sink area, so all the washing goes down in one spot.

Fascinating!! To read more out plus see the video and fotos click here

My comment: And I thought our local Alameda “Spite House” was narrow at 10 ft. wide! I saw the inside several times at open houses and the floor plan worked out well. This 5 ft. one is teeny!!

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Recap of Collateral Risk Network Meeting

Excerpt: Liz Green of Loan Logics spoke on data in the modern age of appraisal. Liz has been actively involved in Mortgage Industry Standards Maintenance Organization (MISMO) for many years and is considered one of the leading experts. MISMO is responsible for developing standards for exchanging information and conducting business in the U.S. mortgage finance industry. Liz described the future of data as less a static form and more an expanding and collapsing set of data based on property type.

There is a desire to shift away from free-form text in addendums to more discreet data collection that can be machine-read. This would not eliminate the comments in the report but help to distill the data down into meaningful and useful data. Ideally, providing a single presentation or view that presents a minimum standard set of data and then case-driven details. The appraisal process for residential property has always been affected by the role of the form templates published by the GSEs. The emphasis on data collection is paramount.

To read more, click here

My comment: The CRN group was formerly for lender appraiser managers, but has been mostly AMCs since they took over. I was only able to attend one meeting, many years ago and it was definitely worthwhile. Meetings are now open to appraisers who can attend to see what is happening with AMCs and lenders. Some of the meetings are at Appraisal Buzz conferences.

I have been following MISMO for many years. Gotta get that darn data standardized to have better AVMs by using forms data from appraisers!!

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Practical tips you can use today for getting more

appraisals done and make more money

Excerpts:

“Just Say No”

No appraiser can do every appraisal assignment. If you’re a residential appraiser, do you accept a commercial appraisal assignment? Would you accept an appraisal in a distant town you have never heard of? One of the greatest time savers is using the word “NO”. The inability to use this word leads to taking on too much work, procrastinating on more difficult assignments, and feeling very stressed out with a negative attitude.

Take time off

Even a few hours a week or 10-15 minutes per day can make a difference. If you are stressed and overworked, your productivity will go way down. Set aside time with no phone calls or emails. When I am stressed and overworked because I took on too much work, I sometimes just park my car under a tree for 10-15 minutes while out in the field. Get out of your office and go to a movie. Your family and your health are your number one priorities. Clients can always find another appraiser!!

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The end of the mortgage refi boom?

Refinancing volume has fallen since reaching a three-year high in 2019’s third quarter

Excerpts:

For the year, refinancings are predicted to fall to $690 billion from a six-year high of $918 billion in 2019, according to Fannie Mae. Next year, refi volume probably will decline to $538 billion, according to the forecast.

The refinancing share of mortgage originations in December fell to 46%, the lowest since August’s 43%, according to Ellie Mae. It’s a sign the refinancing boom is over, for now.

The dollar volume of refinancings hit a three-year high of $331 billion in 2019’s third quarter before falling to $300 billion in the final three months of the year, according to Fannie Mae.

It probably will drop to $211 billion in the current period and $161 in the second quarter, according to a Fannie Mae forecast.

For more info, click here

My comment: Residential lender appraisals are driven by refis. Of course, no one knows what will happen. If I did I would be rich!!

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Cobras and the Appraisal Foundation

By Jonathan Miller

Excerpt: Like most appraisers, I am frustrated by the argument that USPAP has to be continually updated and the realization that most of our industry simply can’t keep up with the changes. Setting standards is a good thing and I recognize and appreciate all the hard work that people on TAF do. My issue is the frequency of change and that’s what residential appraisers need to see changed.

And then comes this bombshell new book “Dispatches from the Cosmic Cobra Breeding Farm” that I received this week and wow, the writing style of the author Jeremy Bagott is spectacular. This guy can write. The book cover looks like an Isaac Asimov sci-fi novel but it reads like Stephen King, full of current cultural references. I got it this week and have nearly read the whole thing.

The book’s favorite target is TAF president Dave Bunton who is referenced dozens of times and portrayed as the source of the problem, and references Dave’s $760,000 compensation.

To read more, click here

My comment: I have not read the book, but don’t like the continual USPAP changes, Bunton’s high compensation, etc.

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Single-Family Zoning Is Weird

All over the world, people live in standalone houses. Only in the U.S. are those homes so stringently separated from other types of housing.

Excerpts: The most famous explanation for why single-family zoning is so prevalent in the U.S. is probably Dartmouth College economist William Fischel’s “Homevoter Hypothesis”: Except in a few cities, local politics is dominated by homeowners, homeowners favor policies that increase their property values and single-family zoning is perceived as doing just that…

Single-family zoning is now on the defensive in the U.S., with the Minneapolis City Council voting in 2018 to allow up to three housing units on every residential parcel, and the Oregon legislature doing something along the same lines (the rules vary by size of city) last year. Although similar legislation has so far failed in California, other reforms to allow homeowners to add units to existing houses have in the words of one expert put the state “on the precipice of single-family zoning functionally not existing,” and the bolder reforms aren’t dead yet.

These efforts have engendered some alarmed — and alarmist — reactions…

To read more, click here

My comment: In my market, parking is the big issue. 1 parking space for each is totally inadequate as usually each adult has a car. Additional units added to an SFR use often means less on street parking. On other side, there is a housing shortage, including homeless, in many areas.

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Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

CORRECTION Last week’s MBA stats had the wrong data.

Click here for the correct link. Thanks to subscriber Teresa Martin, Sandy OR for letting me know!

Mortgage applications increased 7.2 percent from one week earlier

WASHINGTON, D.C. (January 29, 2020) – Mortgage applications increased 7.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 24, 2020. This week’s results include an adjustment for the Martin Luther King Jr. Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 8 percent from the previous week and was 146 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 17 percent higher than the same week one year ago.

“Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week. Rates were driven lower by investors’ increased concern about the economic impact from China’s coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With the 30-year fixed rate at its lowest level since November 2016, refinances jumped 7.5 percent. Purchase applications grew 2 percent and were 17 percent higher than the same week last year. Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019.”

The refinance share of mortgage activity decreased to 60.4 percent of total applications from 61.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.7 percent of total applications.

The FHA share of total applications decreased to 10.7 percent from 11.3 percent the week prior. The VA share of total applications decreased to 11.7 percent from 13.8 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.81 percent from 3.87 percent, with points increasing to 0.28 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.78 percent from 3.87 percent, with points decreasing to 0.2 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.82 percent from 3.78 percent, with points increasing to 0.27 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent from 3.25 percent, with points remaining unchanged at 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.15 percent from 3.29 percent, with points decreasing to 0.12 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

2033 Clement Ave. Suite 105, Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com

www.appraisaltoday.com

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